Thursday, September 30, 2010

UPDATE. Here's the full report alleging that Spain is hiding a whopping 14% decline in GDP (a 17.3% actual fall vs the 3.1% official figure). It comes from an anonymous source, so take it FWIW:Spanish GDP Report

UPDATE II. Hmmmm... Angel Gimeno, who just left the Socialist party and is calling for Zapatero's impeachment, wrote on his blog (in Spanish) about this back in May.

UPDATE III. Let me be clear: I have no clue on who wrote the report, but the language that Tyler Durden uses ("a Spanish blogger who wishes to remain anonymous") suggests me he does. And I have a hard time thinking that the FT would publish, even on a blog (not the paper itself) such information if they really didn't know who the author is (whether they say they don't, maybe to avoid questions, is another matter). The language in the report suggests it's written by a Spanish speaker with a reasonably high knowledge of English, but not totally proficient, and who has access to the central bank's data. The report has been making the rounds for hours now, but the markets don't seem to be reacting negatively: they've even gone upwards, which is somewhat surprising on the day that Moody's has downgraded Spain.

But precisely because it would represent such a massive fraud, I'm skeptical. Statistical skullduggery would answer some questions, but raise others, like how come tax revenues are now rising? Why isn't the budget deficit bigger--is it all lies? If so, where are they getting the money to spend? And how on earth did the government manage to coordinate such a massive fraud? . . . . It looks to me as if the anonymous blogger is resting too much on divergence between previously correlated series; this divergence is interesting, but series do diverge from time to time, and that's not necessarily a sign that someone has gotten creative with the underlying data.

UPDATE V. Alphaville, the Financial Times blog that started it all, is now exercising the caution that it should have exercised from the start, and has updated the post -- actually it has removed all the original content and replaced with some questions on whether the report was politically motivated. Perhaps. On the other hand, from conversations I've had with people who know this stuff it does seeem that there's a widespread suspicion among economists that the official 3,1% decline in GDP is excessively low, though a 14% difference is way out of line. It'd be a catastrophic collapse of giant proportions and yes, the country is in trouble, but not that much.

I hope.

UPDATE VI. For the record, I am not the anonymous blogger that Megan refers to -- it's the blogger that the posts at Alphaville and Zero Hedge, which I linked, are talking about. For good or worse, I'm completely identifiable...